Unsecured creditors of Steljes Limited have been told to expect a return of three pence in the pound after its administrator failed to find a buyer for the fallen distributor as a going concern.
Steljes went out of business on 23 May owing 124 unsecured creditors a combined £6.73m, according to a statement of administrator's proposals now accessible on Companies House.
Some 120 of these were trade creditors with total debts of £6.09m, the largest of which, interactive display vendor SMART Technologies, was owed £2.93m.
BenQ (£1.16m), Epson (£680,000) and NEC Display Solutions (£156,000) were the next-largest creditors.
Secured creditors, including Lloyds Bank Commercial Finance (LBCF) – which was owed £4.53m – are likely to get all or most of their money back, Steljes' administrator AlixPartners said in the report.
But unsecured creditors are likely to see a minimal return, AlixPartners said as it explained that an inability to provide warranties had made Steljes' leftover stock worth a fraction of its £5m book value.
To the date of the report's publication on 8 July, the administrator had realised £794,000 in stock sales and collected book debts of £372,000.
"It is likely that the variance between the estimated to realise values in the Statement of Affairs and the anticipated final level of realisations will be significant."
Detailing the circumstances behind Steljes' demise, AlixPartners said the Bagshot-based audiovisual distributor had been experiencing increased competition and margin erosion as the market reached maturity, leading to losses in the preceding 12 months.
"During this period, management also sought to turn the business around and diversify into own-brand products. However, due to an adverse change in the terms of trade with a key supplier, the company's cashflow and consequently its ability to continue trading was severely impacted," the report stated.
Steljes' directors initially approached AlixPartners on 17 May, before formally engaging it on 19 May.
On being appointed as administrator on 23 May, AlixPartners ceased to trade the business immediately and entered into a controlled wind-down process. Some 54 staff were made redundant on the day, with 17 retained to assist with realising the stock and collecting book debts.
A sale of Steljes' business and assets as a going concern was initially explored, but no viable offers were forthcoming, the report said, meaning the only option was to raise cash by selling off stock.
At the date of AlixParters' appointment, Steljes' stock had a book value of £5m and an estimated to realise value of £4.25m. It comprised a significant volume of interactive whiteboards, screens, panels, tables and additional components such as speakers, projectors and stands. In addition to this, there was a quantity of Steljes Audio and ConXeasy branded stock which had been ordered and paid for from overseas manufacturers but was in transit at sea at the time of appointment. This was sold in its entirety for £200,000.
To date, £794,000 has been realised in respect of stock sales, the administrator said, adding that further sales are being negotiated.
"It is likely that the variance between the estimated to realise values in the Statement of Affairs [£4.25m] and the anticipated final level of realisations will be significant," the report stated. "This is following a consultation with our stock valuation agents and is largely due to not being able to provide warranties or guarantees on sales."
The administrator kept on three of Steljes' staff specifically to collect book debts, which stood at £4.5m. Of this, the administrator has so far collected £372,000 and LBCF a further £1.2m directly.
Steljes Limited also had inter-company debts with other firms in the Steljes Group, namely £226,000 with Steljes Evropa, £562,000 with Steljes Ireland, £86,000 with Steljes Audio and £2.44m with Steljes Rental. Negotiations on this front with Steljes Evropa and Steljes Ireland are ongoing, the report said.
The administrator is currently in negotiations with interested parties regarding the sale of its 100 per cent shareholdings in Steljes Ireland and Evropa, the report added, while the sale of its 90 per cent shareholding in Steljes Rental has been agreed in principle.
Of its secured creditors, the Bank of Scotland is likely to recover its £100,000 debt in full. LBCF's likely level of return on its £4.53m debt stands at £4.37m, while preferential creditors are likely to be paid their £124,000 debt in full.
Unsecured creditors are expected to receive just three pence in the pound. This includes 120 trade creditors owed £6.09m. It also includes HMRC (owed £130,000 in VAT) employees' non-preferential arrears of salary and redundancy (£340,000), Steljes LERBS (£100,000) and Steljes Rental (£71,000).
The administrators are required to provide a progress report within one month of the end of the next six-month period.
A creditors' meeting will be held if 10 per cent in value of the creditors request it by this Thursday, 21 July, the report said.
SMART declined to comment.
Businesses also admit to holding data without permission of subjects
Zedsphere says end-point security vendor's offerings will be a 'key' feature of its wider portfolio
New acquisition will bring UK cloud service provider's global headcount to over 700
Law firm claims that Oracle lied to investors over what is driving its cloud revenue growth and boosted sales through 'threats and extortive tactics'